Poloniex Will Disable Trading for Nine Altcoins for U.S. Customers Only

On Thursday (May 16), crypto exchange Poloniex, which was acquired last year by FinTech startup Circle, On Thursday (May 16), crypto exchange Poloniex announced that it plans to disable the markets for nine cryptoassets (that are currently listed on its platform) for its customers in the U.S.

The nine affected altcoins are Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), NEO Gas (GAS), Lisk (LSK), Nxt (NXT), OMNI, and Augur (REP); trading in these assets will be disabled on Friday, May29, at 16:00 UTC, for the exchange's customers in the U.S. (this action will not affect those customers outside the U.S.).

Via a blog post published a short time ago, Poloniex explained that it was taking this action due to the lack of regulatory clarity in the U.S. market. More specifically, it seems that Poloniex does not want to get in trouble with the U.S. Securities and Exchange Commission (SEC) since these assets might be considered "to be securities."

Poloniex says that it understands how "frustrating" this decision will be for its U.S. customers, but it had no choice since it is "committed to complying with regulatory requirements in every jurisdiction."

All U.S. customers who have holdings in any of the aforementioned cryptoassets on Poloniex "must finalize all trades and close any positions in these assets prior to May 29th." After the delisting in the U.S. takes place, these customers will still be able to "withdraw these assets from their wallet" for as long as these assets stay listed globally.

What is significant about this announcement is that is probably the first time that a crypto exchange has chosen to delist certain cryptoassets for a subset of its customers due to regulatory uncertainty over whether those assets are securities or not, but now that Poloniex has set the precedent, it seems more probable that in the near to medium term we will see other U.S. crypto exchanges (such as Kraken) take a similar action.

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak, a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.